A lot of us almost tiptoe into the world of business; we think about all of the risks that are involved in such a step. Considering the frightening start-up statistics that commonly do the rounds, this really shouldn’t come as a surprise. However, by the same token, there are some businesses that experience monumental growth. This is something that can bring its own challenges though, as growth can be a dangerous game. Through today’s post, we will now take a look at various ways in which you can manage your business growth, so it doesn’t fall into the old trap of “growing too fast, too soon”.
What are your cash requirements?
During a period of growth, many businesses are primarily concerned with simply “making as much money as possible”.
While such an approach is admirable in some ways, in others it is a cause for disaster.
After all, if you just have one eye on the profits, you don’t step back and see the impact on what costs are being incurred as a result of this growth.
These costs are going to be different for any business. For example, in some cases, a boost in growth may require a fast increase in stock.
Then, in this case, growth may prompt a requirement for additional business storage options.
All of these costs need to be forecasted as your business progresses.
If not, you’ll soon find that you are quickly expanding, without having the means to pay for it.
The industry refers to this as cash flow.
Continue to control costs
When companies tend to grow, one of the biggest mistakes that they tend to make is allowing costs to spiral out of control.
They start to spend money on the “nice to have” elements of business, rather than simply the necessities that they once just turned to.
A common example in this regard is a shiny new office just a stone’s throw away from central London or a brand new company car.
Sure, in some cases they might be warranted, but in others, it can be going beyond your means.
It means that when it comes to paying for this growth in your business, your capital is locked up in purchases that you didn’t really need.
The same rules apply with a debt
In some ways, this final point ties very closely with some of the others that we have already discussed.
As you have probably already realized, it’s absolutely crucial to stay on top of your finances at any stage (whether you are growing, treading water, or even going backwards).
The same rules apply to debt.
Most businesses have it, but the trick is learning how to become a viable client to the bank.
In other words, you can’t just borrow for the sake of borrowing, you need to show that you are a shrewd investment for them and you’re not a risk.
This means that even when your growth isn’t perhaps as accelerated as it could be, make sure that you act as a good client.
Let’s not forget that during immense periods of growth you probably will need the help of a lender, so proving yourself during the slower periods is crucial to allowing your business to do this.